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William Perez

Keeping Track of Gambling Losses

By April 5, 2006

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Today's tax question comes from G.K. in Wisconsin. He asks:

"Last year I won considerable money on slot machines at the casino. I actually spent more winning it than I had wanted to so my joint tax return sent my wife up the wall. How should a gambler proceed with keeping records, and finances separate from his personal family assets? Also how should slot players document their winnings to satisfy the IRS? The current required ways are just too feeble, as playing slots is a variable which can go into infinity, and is too unreasonable. Thanks for your comments."

As I wrote in an earlier article, "You'll need receipts from the casino's cashier, a daily log, or a win-loss report from the casinos you play at." Most casinos are happy to provide you with a win-loss report, but you have to request it. Win-loss reports are accurate only for slot play, and then only if you used your player's card to track all your plays. Win-loss reports for table games such as blackjack and craps are based on average bets over a period of time, but again only if you used your player's card to track your bets.

The IRS states that "it is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses." Source: IRS Tax Topic 419.

Additionally, the IRS sets out some very specific recordkeeping requirements in Publication 529:

"You must keep an accurate diary or similar record of your losses and winnings. Your diary should contain at least the following information.
  1. "The date and type of your specific wager or wagering activity.
  2. "The name and address or location of the gambling establishment.
  3. "The names of other persons present with you at the gambling establishment.
  4. "The amount(s) you won or lost."
Source: Publication 529, section on Gambling Losses.

Throughout the tax season I will be answering one tax question per day. Do you have a question? Visit the Ask a Tax Question page. Disagree with my answers? Post your comments in the Tax Forum.

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